Opinion: Uber has lost its inevitability, and that may hurt the company most of all

Key Uber executives will be gone when Apple, Tesla, Lyft and others redefine the ride-share business to accommodate driverless cars

By

TimMullaney

Writer

Uber Technologies Inc. has lost so much this year: The allegiance (and patronage) of people repelled by the company’s attempts to work with President Donald Trump; the respect of women, and the men who respect them, as allegations piled up of sexual harassment and the blind eye management turned toward them; and, finally, its founder and chief executive, after Travis Kalanick stepped down after pressure from shareholders.

But what may hurt most of all is that Uber has lost the sense of inevitability that was its most sustainable competitive advantage.

Think about it: The market for ride-sharing is expected to change completely as self-driving cars get ready for prime time, only a few years out now. Bulls like Morgan Stanley analyst Adam Jonas see it as a multi-trillion business opportunity in which people give up owning cars to become regular clients of creative companies reinventing how we look at transportation, one Jonas reviewed in a report Wednesday that barely mentioned Uber, focusing on Apple and Tesla.

Uber was the first mover in this migration away traditional auto travel, giving investors a reason to tolerate its giant losses. They’ve figured it would wash out when that first-mover advantage played itself out, much as it did for Amazon.com in e-retailing or Netflix and for Alphabet’s YouTube in online video. Uber lost a reported $2.8 billion last year, yet has raised at least $11 billion in venture funding because the assumption has been that a management team relentless enough to shove its way to the front of the ride-sharing queue would figure out how to turn the advantages it already had into profits.

After all, if there’s one Silicon Valley truism, it’s that figuring out the profit model is easier than figuring out how to build a unique product and define a never-before-seen market.

And that means the people who established Uber’s real edge won’t be there when Apple
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Tesla
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General Motors
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-backed Lyft and others are redefining the business to accommodate driverless cars.

Most of the innermost circles of Kalanick’s senior management team will have left the building, if they haven’t already, by the time he returns. Only then will he and the new team turn in earnest to the task of convincing people — especially suburbanites and non-Millennials — to give up car ownership.

This new-market creation will have to be done while simultaneously creating a new Uber, following a scathing report from former U.S. Attorney General Eric Holder that said the company needs to change its core values, which include “fierceness” and “super-pumped-ness” — a task that is likely to require a much different executive skill set.

For 13 pages, Holder’s report cites needed changes in Uber’s human-resource policies, from moving a catered dinner that signals the workday’s end to 7 p.m. from 8:15 p.m. (to include workers with families) to trainings on unconscious bias and screening resumes without candidates’ names (to prevent excluding women and minorities). Uber’s newly bolstered HR department will spend years dealing with employees inculcated in the old culture promoted by Kalanick himself, and enforcing new policies Holder says must —yes — cover drug use at company events.

All this will command much of the attention of the company’s next COO, and has nothing to do with Uber’s very difficult core jobs: Define a new market, marshal technology to make it possible, and sell it to millions of people far more skeptical of “shared mobility” than Morgan Stanley’s Jonas.

What Uber is trying is easy to say and hard to do, as the company has proven already. Director David Bonderman resigned after making a dumb, sexist joke at Tuesday’s event to roll out Uber’s more-civilized workplace. And Bonderman, like every other director, voted for Holder’s recommendations. He just demonstrated how much work remains between talking the talk and walking the walk.

That it’s hard won’t be lost on investors called upon to fund the next round of Uber’s losses. That’s particularly so as Uber’s hard-charging ways are reined in and its aura of inevitability shattered, leaving just numbers that point to a company that is fast-rising, but nowhere near fully baked.

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